Online bookies won't pull funding - if tax stays the same

By Nick Toscano

18 May 2018 — 12:15am

Australia's major online sports-betting companies have made a commitment that they will not wind back their multimillion-dollar sponsorships and investments in Victorian racing due to a new digital gambling tax, racing officials and wagering sources say.

A wave of new state-based betting taxes has been a cause of nervousness within the racing and wagering industry. There have long been warnings from business leaders and gaming analysts that many of Australia's online-only corporate bookmakers would not be profitable enough to absorb a large hit to their margins and may be forced to slash marketing and sponsorship spends.

Online bookmakers have agreements in place to live-stream Victorian thoroughbred racing on their digital channels.

Photo: AAP

The new state-based "point of consumption" taxes across Australia mean that, for the first time, online betting companies such as Sportsbet, CrownBet, Ladbrokes and Bet365 will have their revenue taxed based on where bets are placed, rather than where they are licensed. In Victoria alone, a recently announced 8 per cent tax – the lowest of any state so far – is expected to generate more than $30 million a year.

But Racing Victoria's chief executive, Giles Thompson, this week said many of the wagering providers had "given undertakings" to the three racing codes that they would maintain their support of the industry, so long as the Victorian tax rate remained at 8 per cent.

"The major wagering service providers have committed to continue their critical support of, and investment in, Victoria's racing industry," Mr Thompson said. "This includes support and promotion of all three codes as key wagering products on the wagering service providers' owned platforms, as well as industry media assets such as Racing.com and club sponsorship agreements."

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Wagering sources said the commitment was given on the condition that the tax remained at 8 per cent. "If it goes any higher than that," one said, "all bets are off."

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Online bookmakers have agreements in place to live-stream Victorian thoroughbred racing on their digital channels, delivering $14.4 million in rights fees to the industry in the 2017 financial year. They are also major partners in the racing industry's media assets, including Racing.com, and some have commercial partnerships such as naming rights and race sponsorships with thoroughbred racing clubs, such as the Ladbrokes Cox Plate, the Sportsbet Ballarat Cup and the CrownBet Balnarring Cup.

"Whilst it is fair to say that the tax remains a point of concern for wagering service providers, we are pleased that they have recognised and support the importance of a sustainable Victorian racing industry," Mr Thompson said.

Racing officials were involved in the successful lobbying efforts to discourage the Victorian government from following other states in adopting a 15 per cent point-of-consumption tax, and opting for an 8 per cent rate instead.

Racing Victoria said it was "100 per cent reliant" on wagering, and warned an unsustainable tax hike risked jeopardising bookmakers' investments and forcing worse odds, which could encourage punters to bet on sports with better returns.

Treasurer Tim Pallas last week said the new tax would be reviewed after the first 18 months, with some investment bank analysts saying Victoria may then hike the rate to 15 per cent in line with South Australia and Western Australia. Analyst Donald Carducci, from investment bank JP Morgan, said he believed the other states might end up lowering their 15 per cent rates in line with Victoria.

Former Labor frontbencher Stephen Conroy, who now runs an online gambling lobby group, Responsible Wagering Australia, said the 8 per cent tax would have "significant and far-reaching consequences".

"The online wagering industry already pays a significant amount of consumption tax through the GST, as well as corporate income tax to the federal government," he said. "An 8 per cent point-of-consumption tax does not adequately account for these significant contributions and will result in Victoria having one of the highest effective wagering tax rates in the world."